Money Management

Building it up by rounding it down

A little while ago I came across an interesting idea over at Frugal Queen. She said that when doing her banking she often transfered very small sums of cash, such as a few pennies or pounds at a time (thus rounding down the amount in some of her accounts), to help chip away at her debts. I’ve always liked the phrase ‘Take care of the pennies and the pounds will take care of themselves’. In this case, it seems particularly apt! 

I was doing a spot of internet banking earlier today and thought I’d have a look and see if I could manage to tuck a bit more into my savings account using the same principle. As I’ve said before, I have several savings accounts for everything from Car tax and MoTs to the House fund. You might remember that I started a new savings fund a few months ago in a new ISA at a pretty good (for the current climate) interest rate. On pay day I’ve been transferring my savings into a general savings account and then paying in to my ISA now and then. I don’t do it straight away because this is my only day-to-day emergency fund (I have a ‘proper’ emergency fund but it is in another ISA so it is for real emergencies only) and so I like to have easy access to £100 or so. Anyway, I paid some more into my ISA earlier this week taking my ISA balance to £300 (not a huge amount I know but I’ll get there!) and leaving £50 in my general savings account.

After having a tinker around with some of my other accounts and doing some ’rounding down’ here and there I managed to get just over £16 extra into this general savings account. I then decided I might as well use some more cash from my current account to take this up to the nice round figure of £70. It was a good exercise! Ultimately this £70 will end up in the ISA too but I like to have it where it is now ‘just in case’. Now the challenge is not to spend any of it before pay day when I’ll be able to save some more…

Categories: Money Management, Saving | 1 Comment

Working out the cost of gifts

Have you ever worked out how much you actually spend each year on birthday and christmas presents? It’s a scary (but necessary) exercise. Even when I try to work out the barest of budgets for giving to each person I am still a bit shocked when I work out what it costs annually. And don’t forget the cost of greetings cards too. It adds up really, really quickly! I know a lot of people are arty and/or crafty and can make amazing almost free gifts but, sadly, I’m not one of them. I went through a spell of making my own Christmas cards (we’re talking a decade ago mind) which ended when I realised it was costing more than twice as much as buying a pack. Anyway, if you’re in a budgeting frame of mind try this out for a quick exercise:

  • Write a list of everyone who you buy a birthday present for each year. Allocate a budget for each gift and add it up.
  • Write a list of everyone who you buy a Christmas present for each year (for some reason this is always slightly different to my birthday list). Allocate a budget for each gift and add it up.
  • Write another list, this time accounting for extra greetings cards and gifts (include things like weddings, anniversaries, Valentine’s Day, Mother’s Day, Father’s Day and other special occasions. Also factor in wrapping paper for all of the above/ Add it all up.
  • Then add up the above three figures and you’ve got your annual spend on gifts.

Shocked? I was. Even with mostly giving small gifts to a lot of the people the total runs into the several hundreds. I know a lot of people swear off giving gifts altogether and that’s fair enough. I can’t do it though. I love giving presents, even if it is just a book or a scarf! So it’s all about setting a realistic budget. With funds being pretty tight at the moment I’m going to be putting back £25 a month which, gives us a budget of £300 a year. The rest will have to come from little buys here and there from my general spending money. Ideally I would put back enough for the whole budget but a) I want to see how creative I can get with it this year and b) putting back more would mean sacrificing other savings funds that are more important at the moment.

I’ve blogged plenty of times about giving gifts on a budget but if you fancy a refresher, click on the following for how I get organised about buying in advance, a bit more along the same lines and also home-made gift tags.

I have to say, I heart Amazon. I really do. Most people I know love a book or DVD for a gift and the prices are so affordable – plus it is all with free delivery now. I recently bought a new paperback from an Amazon seller for 1p plus £2.80 P&P. The book arrived in perfect condition and was given to a friend as a gift. She loved it (I knew she would – we like reading the same stuff which helps!). £2.81 plus the cost of a card is about as budget friendly as you can get!

Any other ideas for budget friendly gifts?

Categories: Budgeting, Money Management, Saving | 9 Comments

Saving for holidays

I am excited – we are going on our first ever family holiday! Yay! In a few months time we are having a long weekend in Cornwall and our friends and their little ones are coming too. It is going to be great. It is also going to be very shoestring friendly at around £85 per adult for 3 nights. We’ll just need petrol and spending money for while we’re there so it isn’t going to break the bank. It’s so nice to have something to look forward to.

Now I’m back in the land of earners I’ve been working out what small savings funds I should be starting in addition to my ‘main’ savings. I’ve always found it hard to save for holidays when I don’t actually have one booked. However, the reality now is that I can’t put back big chunks of cash quickly (ie over just a few months) so, if I want to have holidays (which I most definitely do!) then I’ve got to go with the slow and steady approach.

Ah, just looking at this photo from our last jaunt abroad makes me want to pack my bags and find my passport. In fact, I might print a copy of it out and stick it up somewhere to keep me motivated! We’re keeping our fingers crossed that we’ll be able to go abroad for a sunny holiday in about 18 months time. It sounds like we’ve got plenty of time to save up but I’ve really got to make a start on it now.

As of next pay day I’m going to try to put back £50 a month (or at least £40) to go in the holiday ‘pot’. Once we’ve had our weekend in Cornwall I’ll continue saving the same amount for the next trip away. If I manage to come under our £200 monthly food budget I’ll put the difference in the holiday fund too. Eyes on the prize, eyes on the prize, eyes on the prize…!

Categories: Money Management, Saving, Shoestring Fun | 1 Comment

What spurs you on?

If you are into the thrifty/frugal living movement – what is it that spurs you on? What makes you keep going when it seems really tough or you feel like you just can’t be bothered?

I get like this from time to time. It’s hard, always thinking about where every penny is going (or coming from!) or always checking you’ve used up every last thing in the fridge when it would be much easier, on those particularly exhausting days, to just get take-out. I don’t get it right all the time but I find I am at my best when I’ve got a really clear idea of what I’m working toward or, unfortunately, if things seem really bad.

The biggest amount I ever saved (and then spent most of – by design) was my maternity leave fund. I saved up enough money to top up my maternity pay and to buy baby/maternity related things in advance. It was really, really easy to go without things to achieve this because I really, really wanted a baby! At the moment, the thing spurring me on is feeling a bit worried by things. What if something happened to my job? What if something happened to Husband’s job? What if we can’t sell our house for enough to be able to put down a big enough deposit (and thus can’t buy anything at all?). What if I want to retrain? What if I go completely insane if I never see another country again?! And so on. Don’t get me wrong – I don’t sit around being morbid and negative all day. But these are the things that tend to play on my mind when I feel a bit worried. Thus when when of them pops into my head I find it easy to turn it into a reason to go and make dinner out of random things in the fridge and cupboards. If I’m worried about the future I find it easy to spend a bit of time online to check what we’re paying out for things and find a way to cut the cost. At the moment, rather than being an annoyance, these types of activity are actually giving me peace of mind. I’m doing all I can do and when I think of, or hear about, a new idea I do that too.

I have to say my motivation has been riding high the last few weeks. I’ve got that ‘Come on – let’s do it!’ frame of mind about spending less and saving money. I hope I can keep up my momentum. Things that keep me going include: keeping my eyes on the prize (all of the things we’d like to do, like buy a house), reading other blogs about people being inventive, clever and optimistic in thier thrifty lifestyles, also reading blogs about financial management and re-reading my small collection of books on personal finance and frugality.

There’s a lot less in the press regarding the economic doom and gloom these days. However, we are far from being out of the woods. I see evidence of the mess we’re in every day; cuts to child tax credits, increased food prices, empty shop fronts, subtle layers of cutbacks and redundancies (not the ‘mass’ redundancies of a year or two ago but the odd position lost here, a few hours cut there and so on). It seems to have less impact because it is old news. But I don’t see that things are going to get better any time soon – the road to economic recovery is going to take years as far as I can see. And it worries me. I’m not exactly losing sleep over it but I’m not comfortable either.

Looking back over this post, it does seem a bit negative. It isn’t meant to be. It’s just the reality of where we’re at, at the moment. For us here in the Shoestring household things are okay – nothing specific to worry about as far as we know – but we haven’t got a huge amount of back-up if some kind of financial disaster struck. And so that’s what is spurring me on at the moment. That and all of the things we’d like to do in the future that don’t come for free.

What about you – what spurs you on with thrifty living?

Categories: Frugal ideas, Home Economics, Money Management, Saving | 5 Comments

Business plan: Outgoings (& a bit about hot chocolate)

I really love Tesco’s own-brand Hot Chocolate. It isn’t a low fat version or anything like that but I do find that it is satisfying enough to stop me from running out to the shop and buying chocolate when the craving strikes (so cheaper than buying chocolate and surely less calories than a dessert?!). It is only £1.45 for a jar and it lasts me ages.

Anyway, on to business. The next stage of running my personal and home finances like a business has been looking at our outgoings. There are quite a few elements to this so I decided to start by looking at all of the direct debits and standing orders on our joint account (which pays for all of our household bills). It turns out we’re doing pretty well. The fixed rate on our mortgage finished last year and out mortgage payment actually dropped because interest rates are so rubbish. Since we’re hoping to move at some point (though it feels like it is never, ever going to happen) and the monthly payment is lower than it has been in years there is no point chasing another deal (particularly as they like to add on ‘administration’ charges just for taking out mortgages these days). Most of our other bills seem to be at good rates too. I couldn’t find a comparable phone package with anyone else (we pay £24.99 a month for our line rental, unlimited broadband and free landline calls at any time of day. They give us a discount on calls abroad and we try to use the free minutes on our mobiles to call other mobiles to not add to the phone bill). However, there are a couple of things that can be improved. The first is our gas and electric bill. I know this really needs to be looked at properly so I’m going to deal with this another day when I can give it my full attention. That leaves our RAC cover.

Husband took the cover out six years ago. I’d argue that we don’t really need it but Husband wants us to keep it up, particularly now we have Baby. Fair enough. Our payments have recently increased to just over £10 a month. Having looked at both RAC and AA websites this is far too much. I contacted RAC to see if they could reduce our payments to the amount shown on their website. A very sarcastic ‘customer services’ lady told me that ‘everyone knows’ companies offer better deals to new customers and if we felt that as ‘loyal’ customers we should be given a better rate we should have brought it up when the policy was automatically renewed. Apparently it can’t be changed until the next time the policy is up for renewal. Clearly in these tough times RAC can afford to lose customers. AA are offering cover for a year for around £62. It can be paid monthly but it works out to be about £1 more a month. I’m going to see if we can scurry up the cash to pay it in one go and take advantage of the saving. This would take it to the equivalent of just over £5 a month – half what we are paying now for exactly the same thing! As soon as I can confirm there are no penalties for cancelling the RAC policy (and that we’ve got the £62 for the new one) I’m making the switch. And that’s about it. Until I face up to trying to figure out how to compare energy tariffs that is…

Have you saved money by switching companies recently?

Categories: Home Economics, Money Management | 2 Comments

Business plan: ISAs (and a bit about reusable cloths!)

The other day I mentioned my latest strategy of organising my finances in a more business-like way. I decided that the most important place to start were my ISAs. Because you earn interest over the course of the financial year, time literally is money. Thus it was first on my list. My action plan on starting out looked like this:

  • Find out my current interest rate for ISA 1. Ask if it can be improved and by how much. Ditto for ISA 2.
  • Check interest rates with other providers, remembering to look at rates for both new accounts and for transfers (rates for transfers rather than new accounts tend to be less). Consider if it is worth opening a new ISA for any savings in the current financial year.
  • Change/open accounts if necessary.

Fisrt up, ISA number 1. I had already popped into my local branch and asked about the interest rate. A staggeringly crap 0.5%. Just by asking, they increased it to over 2.5%. After thinking about this I’ve decided to keep it open. By transfering it I could only get an extra 0.3%. Since this ISA is ‘attached’ to my current account (thus very convenient) I decided to leave it where it was.

Second up, ISA number 2. I spent a frustrating few days trying to contact my ISA provider but the line was constantly busy. Having decided the rate was probably as bad as for the first ISA (and their customer services weren’t up to much since I couldn’t actually get hold of anyone) I thought I’d open a new account and transfer it out. By coincidence they sent me their statement for the year 2010/2011 this morning. I was pleased to see that, despite me not contacting them or chasing them up, my interest rate had not dropped and I had earned over £90 in interest – yay! I’m really impressed that they gave me their current ‘best rate’ in spite of me not being a new customer or hounding them about it. Long may it continue. I’m leaving my money where it is.

Which left the last point on my ‘action plan’ – deciding whether or not to open a new ISA and where. While I’m happy enough with where my current ISAs are, I decided I’d like to take advantage of some of the offers available for new customers/ISA accounts. I checked Money Saving Expert for the latest deals and chose a provider that is offering 3.3%. If the interest rates go up then so does my interest payment but they won’t go below 3.3% if they drop. Great! The offer is only ‘good’ for the first year though so I’ve made a note in my diary to review it then. I made a call and 17 minutes later (my phone tells you how long each call is – I’m not that much of a freak, honest) my account is all set up. Yay!

I really do feel that I’ve done something worthwhile with my time on this and I’m looking forward to getting as much into that new ISA as I can. I’ll be trying to get my ‘business head’ on over some other areas of our finances shortly. Watch this space.

On a final, and rather different, note – do you use washable kitchen cloths?

Mum recently introduced me to these pretty cloths that you can buy in Tesco. They have worked out to be about 50p each but, rather than throwing them away when they are ‘dead’/falling to pieces/generally too manky you can pop them in the washing machine and they come out as good as new – ta da! I know plenty of people chop up old T-shirts etc and make cloths which is a great idea. I’ve never done this, mainly because I take clothes to the charity shop when I’m done with them but it would be worth giving it a go if you had something ripped that couldn’t be reused. Plus these are so pretty. I’m convinced they are saving me money already. Particularly with Baby around, I seem to spend a lot of time wiping things up these days and they are so small they can easily be added to a regular wash (so no cost there). Brilliant!

Right. I’m off to enjoy the fact that Baby is having a rare, long day time nap and go put my feet up…

Categories: Budgeting, Frugal ideas, Home Economics, Money Management | 11 Comments

Running it like a business

It has frequently occurred to me that I really ought to be running my personal and home finances as though they were a business. While I’ve thought it, however, I haven’t actually acted upon it. I’ve seen other bloggers with similar ideas (such as the SMART concept etc) but that’s not quite what I mean. My idea is a bit more simple. What are the basic questions that you would have to ask if running a business? What plans would you need to make to stay in business and so on? Here are my initial thoughts:

  • What is my income?
  • How can we increase income?
  • How much do I already have and how is it working for me?
  • What are my overheads? How can they be tightened up/cut?
  • Are there any procedures in place that could be changed to be more cash efficient?
  • What resources do we have?
  • What is the budget?
  • What spending is necessary to take the business forward?

I mean, you don’t want to get too obssessed by this stuff, but it can be an eye opening way of looking at things. It has been for me, anyway. I can already see that I’m currently very efficient in some areas yet simply not paying attention to others at all. For example, I’m really good at staying within budget but I’m not looking after what I’ve got (my profits if you like) at all well. I need to find better interest rates for my ISAs for a start. For example, I’ve got an ISA with just over £3k in it (this is our fund for paying legal fees etc when we move). It’s been kicking around for years. I don’t think about it much because I pretend it isn’t there (so I don’t spend it!). A few years ago, when interest rates were better, this used to give me a about £150 a year in interest. The interest earned over the last year? £35. Rubbish! I’m considering firing myself right now.

This sounds like small fish to be frying (it is) but think of the logic. I wrote a post last week about saving money on bin liners by using carrier bags. I’m going to estimate that I would have spent £2 on binliners 6 times a year. So if I stick to my carrier bag plan for a whole year, I’d save £12. Now, interest rates are pretty crap at the moment, but say I’d been on the ball and moved my ISA elsewhere so I’d earned £80 in interest instead of £35. That would be £45 more than I’ve just received. I’d have to come up with another TWO cost cutting exercises like the bin bags just to save what I could have earned in interest. Am I making sense?

There is no point being exceptionally budget conscious and thrifty if I don’t back it up with good money management. And vice versa, I’m sure. So. I’m going to be getting my business head on and sorting things out!

Categories: Budgeting, Home Economics, Money Management | 5 Comments

Days 5, 6, 7 & 8 of the challenge

Don’t think I haven’t been busy just because there hasn’t been a post on the 17 day challenge…I’ve actually been too busy to find a moment to write a post! I’ve managed to get the following done:

Financial planning: I like to have a list in my Filofax showing all of the direct debits and standing orders coming out of the joint account for the month ahead. Sometimes the amounts vary (the payment for the TV licence only comes out quarterly, the phone bill is different each month, council tax and water are only taken out 10 months a year etc) and I like to cross each ‘item’ off the list as I check the account through the month. When I know a payment isn’t coming out or has been less than planned for I transfer the difference into our savings account. However, I’m a bit crap at remembering to print out the list and use my Filofax holepunch to file it in the first place! To make sure I stay on top of things I have printed out lists for the rest of 2011, adjusting each for when I know payments will vary (as with the TV licence). This should make life a lot easier once I’m back at work and pushed for time.

Hair: Eeek. Yes, I bit the bullet and booked an appointment with my usual hairdresser for the much debated highlights. I really had to get my hair sorted out – it hadn’t been trimmed since the beginning of October and was looking really ratty and awful. I’ve had about 6 inches lopped off. The highlights look pretty good. If you look hard you can tell but I don’t think you’d notice otherwise. I only had a few, very fine ones through the top. The sun has already been lightening it up a bit so I’m hoping that it will continue to do it’s work through the summer! My hairdresser said that, particularly as summer is coming up and I am still blonde (just darker than before), I won’t need them doing very often – just in winter. This is good from a budget point of view. It only cost £40 though I did give a £5 tip.

Washing & Ironing: Gah – I thought this was never going to end. Actually, it hasn’t quite. I still have one small pile of ironing left to tackle. It took me an age (okay, a couple of days) to get through it all but my work clothes are now pretty much ready to go. It was good to have them all out at once as I can see exactly what I need to buy (a couple of smart T-shirt type tops for example). However, I’ve got enough for now and will certainly manage to get through until my first pay day when I can figure out my budget and see what I can get.

And that’s it for now. Back (hopefully!) tomorrow with a further progress report!

Categories: Budget beauty, Money Management | 1 Comment

Day 3: Financial planning

One quick bit of organising I did earlier was this:

I have a habit of stashing articles that have caught my eye; I find them stuffed in notebooks, the back of drawers…all over the place. I had some A4 plastic envelopes left over from when I was reorganising my paperwork and so I’ve sorted the articles by category (Interiors, Books etc). This means I can find them easily and know exactly where to put any articles I come across in the future. Okay, it was hardly urgent but it helps! 

I’ve also sat down and gone through our joint finances. I only tend to talk about my ‘own’ finances on this blog – not so much our joint finances. When I started this blog in 2009 I had not long finished paying off my last bit of personal debt (a small loan) and was gearing up to save. However, we did have an overdraft on our joint account at the time. It wasn’t huge at £1000 but I did want it to go. We’d tried paying it off before but somehow the overpayments ended up getting swallowed by the account and we’d be back, fully overdrawn again. However, through 2009 we ‘overpaid’ the joint account each month and the overdraft got smaller and smaller until, by the end of the year, it had gone. During 2010 we continued to overpay the account and it meant we suddenly had a nice little fund for smaller emergencies – we could pay for the car to be fixed etc without having to try and scrape and squeeze the money out of another fund for example.

Now we’re in 2011 we are planning to continue overpaying the account. We already have a savings account put aside for car tax but are hoping we can add a bit in for car maintenance (which would otherwise come out of our monthly pay). We are also able to put a small amount aside in our ‘House’ account. The ‘House’ account is where we keep the funds for our home improvements. Once we’ve got it all done (should be sooner rather than later) we’ll continue saving and use this towards putting a larger desposit down when we – hopefully! – buy our next home.

I mention this because, when I do a post on my personal budget, it will be a bit ‘light’ on the saving side. Not because I don’t want to save but because a) I’ll be putting more in the joint account to go towards the ‘House’ savings and b) because I’m not going to have much left over. I’ll be doing a post on this once I know by exact take home pay, but I know I’m not going to have a lot to play with. I suspect some ‘living on less’ posts will be appearing here soon!

So that’s two things ‘done’ today – organising my articles and preparing a strategy for our joint finances. Nice.

Categories: Decluttering, Getting organised, Money Management | Leave a comment

Plans for 2011: (Part 2) Finances

Finances, as ever, are going to be playing a key part in my plans for 2011. I’ve seen PF bloggers do fantastic looking spreadsheets laying out extensive, well worked out plans and have come across other resolutions such as saving a certain amount or percentage of income. I can’t really plan far ahead as my finances will continue to be very much up in the air next year. For the first month I will still have maternity pay, then for three months I will have no income and then I will be going back to work though (what with tax and what-not) I don’t know exactly what I’ll be getting paid each month until I see my first wage slip. Throw in the fact that we might end moving and end up with a totally different set of expenses and it all goes a bit ??????!

Undeterred, however, I am still resolved to save as much as I can and to keep an eye on my spending. With this in mind, my 2011 financial plan of action looks a bit like this:

  • Spending Diary: I know a lot of books and blogs advise keeping a spending journal for a short while so you can get a clearer idea about where all of those pennies go. However, I’m borrowing an idea from Mum who has bought a 2011 diary specifically to record her spending. I’ve tried recording my spending in my Filofax but I keep clearing out old sheets and scribbling notes over everything and it doesn’t seem to work. I’ve bought an A5 size diary (for the budget-friendly price of £1.49) and am going to record everything I spend FOR A WHOLE YEAR. I’m going to try to make the time once a month to tot it all up – and maybe again at the end of the year. It would be kind of interesting to know what I spend on food, for example, or clothes during the course of an entire year.
  • Saving 20 pence pieces: I’m rubbish at saving money in jars these days. I can’t seem to motivate myself to keep up with it. However, for the last couple of months I have been getting quite good at putting 20p’s in the piggy bank (pictured above). I decided on saving 20p’s because it is a small enough amount to not really notice (and I would really notice it if I had to empty out all of my £1 coins for example) but 20p’s add up pleasingly fast. Thus I am resolving that every time I come home I check my wallet and put all 20p’s into the pig. What I will actually do with my pig money has yet to be decided…
  • Project £5k: Because (yippee!) I’ve just managed to complete Project £1k – and before Christmas too! It is now safely tucked away in an ISA. I won’t be able to save much more until I’m back at work (and I might need every penny for a house deposit) but, all being well, I shall be cracking on with trying to get my savings up to £5k.

There will be other plans that will effect my saving and spending but I’ll cover those in the next few posts!

Categories: Budgeting, Goals, Money Management | 4 Comments

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